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Government Tech Boom Upgrade Cycle Coming

A major tech upgrade cycle is coming, this time from
the government. Jared Kushner led a White House Office Of American Innovation meeting
with top brass from the tech sector yesterday.

Tech Spending Bill

They are moving through Congress
to pass the Modernizing
Government Technology Act which will shift $80B in annual spending to more
modern systems including cloud services. The government will not only shift monies but will also add additional funds.

CNBC reported Mr. Kusher saying that government “systems are
decades old” with two-thirds still legacy systems. CNBC also reportedthat
President Trump’s director of strategic initiatives Chris Liddell said there is
a “$1 Trillion opportunity over the next ten years.”

If this bill passes we are headed for a major
government-led upgrade cycle. The government is already estimated to be about 20-40% of the
total GDP spend.

Biggest Winners And Losers

The biggest beneficiaries are of course likely to be
Amazon, Google and Microsoft. The biggest loser will likely be IBM who
leads in government legacy systems.

Tech Led Productivity Boom Coming

We recently reported that we think there is going to be a huge technology stock boom coming already anyway. Even though the Fed is scratching their heads wondering why productivity is so low, we think it's about to bolt higher.

If you consider the amount of automation and artificial intelligence being designed in to new products this stat below is about to take off.

More spending combined with a productivity jump can help further ignite this stock market rally led by tech growth rates reaccelerating.

St Louis Fed

Conclusion

There are still tons of bears in the stock market but the economy and earnings have been picking up. A technology stock tech boom can add more fuel to this bull market.

Disclaimer: Securities reported by Elazar Advisors, LLC are guided by our daily, weekly and monthly methodologies. We have a daily overlay which changes more frequently which is reported to our premium members and could differ from the above report.
Portions of this report may have been issued in advance to subscribers or clients. All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks.
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